So, why are spouses paying more tax on inherited ISA’s? Data shows that six out of seven bereaved partners could be paying Tax unnecessarily on ISA savings they inherit.
Since April 2015, bereaved spouses
or civil partners have been entitled
to an extra ISA allowance. This
is achieved by what’s called an
Additional Permitted Subscription
(APS). If the investor died before
6 April 2018, the APS is equal to
the value of the ISA on the date of
death. If the investor died on or after
6 April 2018, their ISA will become
a continuing ISA. In this case, the
APS is equal to the higher value of
the ISA on the date of the investor’s
death, or the value of the ISA on the
date it stops being a continuing ISA
(completion of estate administration
/ third anniversary of date of death
/ all funds withdrawn). The surviving
spouse therefore has the option of
having the higher APS value.
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